Old Exam Questions - Current Asset Management Page 12 of 12 Pages Q* = [(2)($20.00)(250,000) / (.10)($4)] 1/2 = 5,000 units And the firm will place 50 orders per year. Assume that the firm has the option of taking a 4 percent discount (price of $3.84 per unit) if it orders 25,000 units per order (10 orders per year). You should now be able to determine whether it is in the firm's best interest to take the discount.

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Unformatted text preview: Now assume that the firm has decided to carry, on a permanent basis, 4,000 units of safety stock. Based on this information determine the total increase in inventory costs that will be incurred if the firm both takes the quantity discount and carries safety stocks of 4,000 units. A. $3,807.00 B. $4,536.00 C. $3,048.00 D. $2,862.00 E. $2,376.00...
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